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One News Now

Fayetteville Observer’s Editorial Touting Privatization of Liquor Sales Prompts Thoughtful Response by ABC Chairman, Jim Gardner

By Hunter Hines
Christian Action League
July 9, 2015

ABC Liquor Store, Snow Hill

ABC Liquor Store, Snow Hill

RALEIGH – Friday, June 5th, the Fayetteville Observer printed its editorial, “Our View: Why Is This State Still in the Liquor Business?”  The newspaper commended lawmakers in the North Carolina General Assembly for their recent approval of HB 909-ABC Omnibus Legislation.

The article referenced the most controversial section of the measure that permits the limited sales of liquor by distilleries directly to visitors of their establishments. The legislation, which is now law, allows for the sale of liquor outside of local ABC stores – something not permitted since the end of prohibition. But the point of the editorial was to say that the bill was too “timid” and the state should completely privatize the sale of spirits.

The editorial reads, “[O]ur lawmakers have adamantly supported the private sector and attacked local government attempts to enter the market. Yet they cling to an outmoded alcoholic-beverage retailing network that would better serve the consumer and the economy if it were privatized…Let’s get the government out of the booze business and let private business take it over. We’d like to raise a toast to that.”

The Observer’s editorial prompted a thoughtful response from North Carolina’s ABC Chairman, Jim Gardner. In His editorial, “Jim Gardner: ABC System Best for N.C.”, Gardner pointed out that the privatization of liquor sales would be “a bad idea.”

Gardner addressed misconceptions about the ABC system, correctly noting that the ABC Commission regulates alcohol sales for thousands of retail outlets, which also includes the more than 400 ABC liquor stores. Nevertheless, the ABC stores are not owned by the state, but are run by the local ABC boards. “As the state does not own or operate the stores,” he writes, “it would realize minimal, if any financial gains by changing this system.”

Gardner also expressed concerns that privatization would likely cause an uptick in underage drinking, something he has zealously sought to raise awareness about through the Talk It Out media campaign. He rightly contends underage drinking costs North Carolinians an estimated $1.3 billion annually and results in as many as two youth fatalities every week. Citing a C.D.C. study, Gardner argues North Carolina’s control model for liquor sales provides the best health strategy for preventing access to liquor by youth and curtailing dangerous consumption levels.

Gardner contends “[p]rivatization does not make fiscal sense, nor does it make public health sense.”  “In Washington state,” he writes, “which converted from state control of its stores to private liquor sales after a 2011 vote, consumers have seen higher prices.” He said “[t]he number of liquor outlets exploded from 329 state-owned or operated stores to more than 1,400 private retailers within two years following privatization.” “There is no reason to believe that our experience would be any different,” he concludes.

“I deeply appreciate Chairman’s Gardner’s editorial,” said Dr. Mark Creech, executive director of the Christian Action League, “he’s right on every point.”

Dr. Creech says the Fayetteville Observer’s editorial which promotes privatization reflects a common lack of understanding for the need to balance the selling of liquor with the recognition that it presents a significant health risk.

“No matter how you look at this subject, liquor is inherently problematic. You can talk all you want about personal responsibility; still the product itself is a mind-altering drug – a drug that with each drink taken diminishes an individual’s ability to be responsible. The product itself is not like other goods, and, therefore requires a more cautious approach than other articles of trade in a free market economy,” said Dr. Creech. “Our control system does two things no privatized system anywhere in the country does as well. It drives down dangerous consumption rates, while keeping revenue high for state and local municipalities. A good portion of that money goes to address alcohol-related problems,” he said.

According to data provided by the National Alcoholic Beverage Control Association (NABCA), North Carolina’s ranks 43rd in the nation for consumption of spirits and 6th in revenue for the sale of spirits. By comparison, South Carolina, where spirits are privatized, ranks 26th in consumption and 43rd in revenue.

ABC Chairman, Jim Gardner

ABC Chairman, Jim Gardner

In 2008, the Program Evaluation Division (PED) of the North Carolina General Assembly conducted a study of the state’s ABC system. The purpose of the study was to examine the possibility of privatization for North Carolina. The PED, however, did not recommend privatization. Instead it reported that control states receive more revenue than states that privatize. The report compared North Carolina’s control system to 12 states that limit sales of spirits to privately owned package stores and found the Tar Heel state had the fewest retail outlets (except for Delaware), received the most public revenue per gallon sold, and had the lowest per capita consumption.

Chairman Gardner concludes in his editorial: “There is no stauncher Republican than I am. There is no one more pro-business than myself. And there is no one more convinced than myself that continuing the Alcoholic Beverage Control system in North Carolina is the right thing for this state and particularly for the children of this state.”

Dr. Creech seemed to echo Gardner’s sentiments, saying, “I believe strongly in a free market, but the sale of liquor presents unique circumstances where all of the free market principles do not apply. Privatization would be a critical mistake. I believe that when North Carolinians distinguish between the facts and some of the political rhetoric for privatization, they’ll always choose to keep our superior system of Alcoholic Beverage Control.”